PRESS RELEASE   
FOR IMMEDIATE RELEASE
25 April 2003

Subject : 

PROPOSED SHAREHOLDERS' MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE ("PROPOSED SHAREHOLDERS' MANDATE")

Contents :

1. INTRODUCTION

On 22 May 2002, AIC had, at its Annual General Meeting ("AGM"), obtained the shareholders' mandate for AIC Group to enter into recurrent Related Party Transactions of a revenue or trading nature with certain classes of related parties as disclosed therein. Those recurrent Related Party Transactions are necessary for AIC Group's day to day operations and are in the ordinary course of business and on terms that are not more favourable to the Related Party than those generally available to the public

Since the shareholders' mandate which had been approved during the last AGM shall expire at the conclusion of the forthcoming AGM unless it is renewed, the Company proposes to seek shareholders' approval for the renewal of the shareholders' mandate for the existing and also new recurrent Related Party Transactions at the forthcoming AGM to be convened.

2. DETAILS OF THE PROPOSED SHAREHOLDERS' MANDATE

AIC is principally an investment holding company whilst its subsidiary companies are involved in the semiconductor, information technology, electronics and automotive industries. Due to the diversity and size of the Group, it is anticipated that the Group would, in the ordinary course of business, enter into transactions of a revenue or trading nature with classes of Related Parties set out below. It is likely that such transactions will occur with some degree of frequency and could arise at any time.

2.1 Classes of Related Parties

Shareholders' approval is sought for the shareholders' mandate involving recurrent Related Party Transactions of a revenue or trading nature which are necessary for the AIC Group's day-to-day operations and which are carried out by companies within the AIC Group with any of the following classes of Related Parties :-

• Asteria Corporation Sdn. Bhd. ("ACSB"), Asteria Industries Sdn. Bhd. ("AISB"), Asteria Electronics Sdn. Bhd. ("AESB") and Asteria Manufacturing Sdn. Bhd. ("AMSB"), Related Parties by virtue of common major shareholders, ie. Golden Prism Sdn. Bhd. ("GPSB") and Nadi Mal Sdn. Bhd. ("NMSB"). GPSB and NMSB are deemed major shareholders of AIC through Asteria Consolidated Sdn. Bhd. ("Asteria Consolidated"), a major shareholder of AIC;

• AIC Properties Sdn. Bhd. ("AICP"), a subsidiary of AIC in which GPSB and NMSB has indirect interest via ACSB;

• Automako Sdn. Bhd. ("Automako"), Autokorsia Sdn. Bhd. ("Autokorsia"), Autoventure Electronics Sdn. Bhd. ("Autoventure") and HKR Manufacturing Sdn. Bhd. ("HKR"), Related Parties by virtue of being subsidiaries of Autoindustries Ventures Berhad ("AIV"), a company in which ACSB, GPSB, NMSB and 2 AIC Directors have direct and/or indirect interest;

• Jotech Holdings Berhad ("JHB"), an associated company of AIC, and its wholly-owned subsidiary and sub-subsidiary companies, Prodelcon Sdn. Bhd. ("Prodelcon"), Multimatic Systems Sdn. Bhd. ("MMS") and JP Metal Sdn Bhd ("JPM");

• Khazanah Nasional Berhad ("Khazanah"), a major shareholder of AIC Technology Sdn. Bhd. ("AICT") (a subsidiary of AIC), and AIC Microelectronics Sdn. Bhd. ("AICM") (a subsidiary of AICT);

• Atmel Corporation ("Atmel"), a major shareholder of AIC Semiconductor Sdn. Bhd. ("AICS") (a subsidiary of AICT); and

• Brimal Stampress Engineering (M) Sdn. Bhd. ("BSE"), a company in which an AIC Director has deemed interest.

2.2 Nature of recurrent Related Party Transactions contemplated

Details of the recurrent Related Party Transactions of a revenue or trading nature, which will be covered by the Proposed Shareholders' Mandate in relation to the provision of, or obtaining from, the Related Party, products and services in the normal course of business of the Group, are detailed in Appendix 2 as attached below.

2.3 Validity period for the Proposed Shareholders' Mandate

The Proposed Shareholders' Mandate shall continue to be in force until :-

(a) the conclusion of the next AGM of the Company following the forthcoming AGM at which such Proposed Shareholders' Mandate was passed, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed;

(b) the expiration of the period within which the next AGM after that date is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or

(c) revoked or varied by resolution passed by the shareholders in general meeting,

whichever is the earlier.

2.4 Disclosure

Disclosure will be made in the Company's Annual Report of the breakdown of the aggregate value of transactions conducted, types of transactions made, names of the Related Parties involved and their relationship with the Company pursuant to the Proposed Shareholders' Mandate during the financial year, and in the Annual Reports for the subsequent financial years that the Proposed Shareholders' Mandate continues to be in force.

3. RATIONALE FOR THE PROPOSED SHAREHOLDERS' MANDATE

The rationale for the Proposed Shareholders' Mandate and the benefits of the AIC Group transacting with the Related Parties are as follows:-

(a) To facilitate transactions of a revenue or trading nature with Related Parties which form part of the day to day operations of the AIC Group in the ordinary course of business, undertaken at arm's length, on normal commercial terms and are not detrimental to the minority shareholders;

(b) To avoid the impracticality of seeking shareholders' approval on a case by case basis before entering into business opportunities or recurrent Related Party Transactions which are time-sensitive and/or confidential in nature, the Proposed Shareholders' Mandate will enhance the AIC Group's ability to pursue such business opportunities or recurrent Related Party Transactions without having to place the Group at an disadvantage as compared with its competitors who may not be required to obtain shareholders' approval;

(c) The Proposed Shareholders' Mandate will eliminate the need to convene separate general meetings from time to time to seek shareholders' approval as and when such recurrent Related Party Transactions occur and thus will reduce substantially administrative time, inconvenience and expenses associated with the convening of such meetings, without compromising the Group's corporate objectives and business opportunities;

(d) In respect of the shared corporate office technical and professional support services and group management services, the Proposed Shareholders Mandate will enable the Group to reduce operating cost and improve business and administrative efficiency; and

(e) The established relationship with the Related Parties enable raw materials, goods and services to be obtained to meet the tight orders of the AIC Group's customers even when short notice is given to them. Thus, the established relationship with the Related Parties have made them reliable suppliers of raw materials, goods and services required by the Group for its business.

4. CONDITIONS OF THE PROPOSED SHAREHOLDERS' MANDATE

The Proposed Shareholders' Mandate is conditional upon the approval being obtained from the shareholders of AIC at the forthcoming AGM.

5. DIRECTORS' AND MAJOR SHAREHOLDERS' INTERESTS

GPSB and NMSB are deemed major shareholders of AIC as they each hold 50% in the equity of Asteria Consolidated. Datuk Haji Sarip bin Hamid, the Chairman and a deemed major shareholder of AIC, is the Executive Chairman and a deemed major shareholder of Asteria Consolidated through his major shareholdings in GPSB. Since GPSB and NMSB are also major shareholders of ACSB and AISB and Asteria Consolidated is a major shareholder of AIV, Datuk Haji Sarip bin Hamid is deemed interested in all the transactions between AIC Group and ACSB, AISB and its subsidiaries AMSB and AESB, and all AIV's subsidiaries ie. Automako, Autokorsia, Autoventure and HKR. Furthermore, he is the Chairman of AIV and a director of Automako, Autokorsia, Autoventure and HKR. He is also deemed interested in the transactions with AICP as ACSB is deemed a major shareholder of AICP by virtue of its major shareholding in Asteria Development Sdn. Bhd., a major shareholder of AICP. In addition, Datuk Hj Sarip bin Hamid is deemed interested in the transactions with JHB and its subsidiaries, Prodelcon and JPM as he is the Chairman of JHB and has interest in JHB.

Tuan Haji Mohd Ali bin Bawal who is an Executive Director and shareholder in AIC, is deemed interested in the transaction between BHSB and BSE as he is a director in BHSB and has deemed interest in BSE as the shareholders of BSE are accustomed to act in accordance to his instructions, directions and wishes. He is also deemed interested in the transactions with JHB, Prodelcon and JPM as he is a Director of JHB and has interest in JHB.

Mohamad Ariff bin Puteh, an Executive Director of AIC, is deemed interested in the transactions with ACSB, AISB, AMSB, AESB, AICP, Automako, Autokorsia, Autoventure and HKR as he is a person connected to NMSB by virtue of him being the spouse of Puan Maznah bte Mohamad, the major shareholder of Hakikat Seri Sdn Bhd ("HSSB"). HSSB is deemed a major shareholder of Asteria Consolidated and AIC by virtue of its major shareholding in NMSB. Puan Maznah is also a director of ACSB, AISB, AMSB and AESB. Mohamad Ariff bin Puteh's son, Mohamad Azmi Mohamad Ariff holds 12% of the equity interest of AESB.

Prof. Madya Dato' Haji Mohd Mokhtar bin Haji Shafii, a non-executive Director of AIC, is deemed interested in the transaction with AISB as he holds 0.03% and 3.05% equity interest in AIC and AISB respectively.

Shareholdings of the interested Directors and major shareholders and the persons connected to the interested Directors and major shareholders in AIC are detailed in Appendix 1 attached below.

The interested Directors, Datuk Haji Sarip bin Hamid, Tuan Haji Mohd Ali bin Bawal, Mohamad Ariff bin Puteh and Prof. Madya Dato' Haji Mohd Mokhtar bin Haji Shafii have abstained and/or will abstain from board deliberation and voting on the respective resolution in which they have interest in pertaining to the Proposed Shareholders' Mandate at the AIC Board meeting.

Datuk Haji Sarip bin Hamid, Tuan Haji Mohd Ali bin Bawal, Mohamad Ariff bin Puteh, Prof. Madya Dato' Haji Mohd Mokhtar bin Haji Shafii and Asteria Consolidated, being Directors and/or major shareholders or shareholders of AIC, shall abstain from voting, in respect of their direct and/or indirect interests, on the respective resolution(s) in which they have interests in pertaining to the Proposed Shareholders' Mandate. The persons connected to the interested Directors and major shareholders, as disclosed in Appendix 1, shall abstain from voting, in respect of their direct and/or indirect interests on the respective resolution(s) pertaining to the Proposed Shareholders' Mandate in which the interested Directors and/or major shareholders have interests in. Further, Datuk Haji Sarip bin Hamid, Tuan Haji Mohd Ali bin Bawal, Mohamad Ariff bin Puteh, Prof. Madya Dato' Haji Mohd Mokhtar bin Haji Shafii and Asteria Consolidated have undertaken that they shall ensure that the persons connected with them, as mentioned above, will abstain from voting on the respective resolution(s) in which they have interests in at the forthcoming AGM to be convened.

Save as disclosed above, none of the other Directors or major shareholders of AIC or any persons connected to the Directors or major shareholders of AIC has any interest, direct or indirect, in the Proposed Shareholders' Mandate.

6. RECOMMENDATION BY DIRECTORS

Your Directors, having considered all aspects of the Proposed Shareholders' Mandate, are of the opinion that the Proposed Shareholders' Mandate is in the best interest of the AIC Group.

7. CIRCULAR TO SHAREHOLDERS AND NOTICE OF ANNUAL GENERAL MEETING

Further information on the Proposed Shareholders' Mandate will be disclosed in a Circular to Shareholders which will be despatched to the shareholders of the Company in due course. The Notice of AGM, which is contained in the Annual Report 2002, will be despatched together to the shareholders as well.

Appendix 1	Appendix 2

        

25 April 2003
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